Frankfurt bookfair: Digital overtakes print in 2018

The Frankfurt bookfair starts this week. It will take place from 14 to 18 October and  the guest of honour this year is China. Over the 5 days nearly 2.500 events will take place.

“This year’s Fair will be the most important we’ve ever had for trying out new things” announced Juergen Boos, Director of the Frankfurt Book Fair, about the upcoming industry event. “The question of how we can earn money with digital content is on everyone’s mind”, said Boos. The time is now ripe for new ideas and business models – whether they be off- or online, mobile or stationary.”

One of the focal points are new businessmodels relating to online readng:

“The book industry is taking an active approach to the digitisation of its content, but it is still in the midst of orientation. This is revealed in a recent survey of 840 international industry representatives, predominantly managers and executives from the publishing industry, which was carried out in September by the Frankfurt Book Fair and the trade magazine buchreport in co-operation with Publishers Weekly.

The majority of participants hail from continental Europe, followed by the USA, Asia, Great Britain and Latin America. ”Now is the time to seek out new strategies, to scour the market, to engage in international benchmarking”, said Juergen Boos, Director of the Frankfurt Book Fair. The one true business model is still a long way off and investments are also still being held in check – at the same time, however, the fear that content will only be distributed free of charge on the Web in the future seems to have been averted for the time being.

Search for strategies and partners

80 per cent of those polled embrace the radical change in the media industry associated with digitisation as an opportunity, rather than as a crisis. Behind the ostensible spirit of optimism, however, there continue to be many question marks. “The industry continues to search for strategies for creating business with digital products. The focus is on business models that can supplement, and eventually eliminate, the accepted model of exchanging money for printed paper”, said buchreport Editor-in-Chief Thomas Wilking in summarising the numerous individual findings of the survey.

The development of new business models, new multimedia products and suitable marketing strategies is cited as the greatest challenge of the industry (607 responses). 38 per cent of those polled also see their companies’ greatest need for catching up in the areas of knowledge and strategy. In 2008, only 26 per cent of those polled rated knowledge and strategy as a priority in their companies. The desire to connect with other creative industries like film, games and music is at the very top of the list of business priorities for 19 per cent of those polled. New forms of e-Marketing are in demand – 27 per cent cited digital reading samples as the most important new marketing activities, followed by viral marketing using social media (22 per cent) and multimedia advertising (19 per cent). However, it seems the time is not yet ripe to commit to one business model – only 12 per cent of those polled feel that there is an urgent need to make investments now.

The second biggest challenge for the media industry is the uncertainty about the changes in media use and reading habits of customers (425 responses). Landing in third place is price competition in the form of countless free digital offerings (354 responses) and the illegal dissemination of protected content through piracy (322 responses). Surprising findings: The current financial crisis (with 79 responses), as well as the strengthened position of authors through their ability to engage in direct marketing in a Web 2.0 world (142 responses) – and the consequential weakened position of publishers and book retailers – are not perceived as considerable challenges for the industry. Around 41 per cent of those polled believe that the financial crisis generally has no influence on the development of new digital business models; only around 33 per cent are of the opinion that the financial crisis is having an impeding effect.

2018: Digital overtakes print

Time is of the essence. As a general rule, digital products still only comprise a small fraction of sales: Around 60 per cent of those polled estimate that considerably less than ten per cent of their revenue will come from digital sources in 2009. However, this will change in the next two years in the opinion of those polled: 41 per cent of those polled calculate sales of up to ten per cent for 2011 and 58 per cent anticipate that digital products will comprise a considerably higher share of total sales. The percentage of those who assume that 26 to 100 per cent of their revenue will come from digital products in two years increased from 24 per cent (2009) to 38 per cent (2011).

The idea that digital content will generate more sales than the traditional book business is also gradually becoming more of a reality. Around 50 per cent of industry experts now see the year 2018 as the turning point: In a comparable survey taken one year ago, 40 per cent saw this date as a “changing of the guard”. In 2008, 27 per cent were of the opinion that digital would never overtake print – today that number is only 22 per cent. Sell, but at what price? The decisive question is which payment model will prevail in the digital world. The favourites from the list provided are clear.

The ranking:

1. Flatrate, a subscription model that allows access to all of a provider’s online content, favoured primarily in continental Europe. (25 per cent)
2. Micropayment, or payment for individual snippets of content, particularly favoured in Great Britain and the USA. (23 per cent)
3. Trailing somewhat behind is the premium model, or a special subscription for selected online content – a variation on the flatrate model. (16 per cent)

Content financed by ads, freemium offers (in which nearly everything is free and only selected online content is subject to a fee), and the strategy of offering online content free of charge to promote physical products requiring payment, play less of a role. In practice a combination of these different models will prevail. Only two per cent of those polled (41 responses) believe that no price model at all works on the Web. 58 per cent of those polled also believe that Digital Rights Management (DRM) will still play a role in digital content in five years. The best way to make revenue off of digital content continues to be the e-book, which represents an already printed book with a price guideline. However, the industry is still completely divided about appropriate e-book pricing. All of the established models have their supporters, with no model claiming an overwhelming majority.

The price for an e-book should be
more expensive than the printed book: 4 per cent
as expensive as the printed book: 15 per cent
10 per cent cheaper than the printed book: 11 per cent
20 per cent cheaper: 17 per cent
30 per cent cheaper: 14 per cent
more than 30 per cent cheaper: 16 per cent
a standard price as with Amazon ($9.99): 15 per cent
other price model: 6 per cent

The accompanying commentary and the tremendous range of opinions it represents demonstrates just how contested this question really is. It is still completely unclear whether or not E-Books will be used merely as a “second book” for a quick glimpse, or whether portions will, in fact, ultimately be sold as mobile content for a price many times higher than the printed work. Also enlightening is the fact that only 35 per cent of those polled count themselves among e-book readers and only 22 per cent use e-readers. The majority of those polled, however, indicate that they never read e-books (65 per cent). Reading online on the screen of a PC or laptop is, with 65 per cent, preferred unequivocally by those polled over the use of special e-readers or multifunctional handhelds.

The US trade magazine Publishers Weekly is a co-operation partner of the survey. The survey was conceived through consultation with Martyn Daniels, Vice President Marketing, Media and Publishing, Value Chain (International) and implemented online by the Frankfurt Book Fair. Information about the survey sample: Of the 840 industry experts who participated in the survey, 55 per cent are men and 45 per cent women.

Age distribution
under 30 years old: 10.1 per cent
30 – 50 years old: 53.9 per cent
over 50 years old: 36 per cent

Regional origin
Europe: 74 per cent
USA: 11.3 per cent
Great Britain: 4.2 per cent
Latin America: 3.5 per cent
Southeast Asia: 2.4 per cent

Publishing segment
Specialised information / Science: 20.3 per cent
Literary publishers: 18.4 per cent
Non-fiction: 13.7 per cent
Education / School: 9.9 per cent
Children’s book publishers: 8.2 per cent
Advice / Knowledge: 6.6 per cent
”Miscellaneous”: 22.9 per cent